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Commentary: GDP, even after revision, is at an all-time high

SPRINGFIELD, Va. (MarketWatch) — Context is crucial when assessing the significance of this morning’s downward revision of fourth-quarter GDP.

That’s because, even with that revision, today’s United States’ Gross Domestic Product is still well into all-time high territory — even in inflation-adjusted terms. In fact, according to the government’s numbers, the inflation-adjusted GDP is now more than 2% higher than where it stood at its previous all-time high in late 2007, just before the 2008-2009 recession. Read more about the GDP revision.

This doesn’t mean that all is well in the economy, of course, or that all sectors have participated equally in the recovery.

Oil prices retreat, supply concerns ease

(2:50)

The price of oil backed off a bit as supply fears eased. Also, Boeing scores a major defense contract, AIG turns a profit for the first time in 3 quarters, and Google unveils changes to its search algorithm.

It’s not, and they haven’t.

But if investors want their approaches to be data-driven, then they have no choice but to incorporate into their strategies the recognition that, after taking into account all the good, the bad, and the ugly in the U.S. economy, it is larger today than before the recent bear market.

Relatively few investors appear willing to accept this, however, as evidenced by the stock market laboring well below its all-time high from October 2007. Therein lies a tale, according to Norman Fosback, the editor of Fosback’s Fund Forecaster. He believes that the stock market is being held back by “the extraordinary pessimism enveloping the consumer investing population, fanned by a fear-mongering financial media.”

There is a silver lining, however, according to Fosback: As a result of investors’ pessimism, he believes, the bull market will likely last longer than it otherwise would have had investors more quickly jumped on the bullish bandwagon.

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